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4th August 2026 | Baya financial

Month: November 2020

The avantages of a portfolio refinance 

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So how are you all this last Friday of lockdown? I’m sure there will be mixed feelings across the country as we all come to terms with the new tiers we have been placed in. With that and all the Christmas news this week it’s a lot to digest.

This week has been a bit of a crazy one for Baya, last week of the month, in a month where everything seems to be taking extra time, so then everything becomes urgent. We are seeing a good volume of business though, which is great – long may it continue!

This week I’m talking about portfolio financing. This is something that I think gets a bit of a bad reputation as being expensive, but there are so many advantages and it isn’t as expensive as you think. The cost of limited company buy to let’s and HMOs, as well as personal buy to let’s where there is a portfolio in the background is creeping up; we are generally looking at about 3.5-4% for 75% loan to value on an individual loan for each house.  As a comparison, we can get under 4% for an equivalent loan with a bespoke portfolio refinance, so not really that high any more.

So why would you choose a portfolio loan? 

  • As your portfolio grows, the time it takes you to source and refinance each remortgage goes up. How long does it take you to refinance each property and what else could you be doing with this time? Looking at properties separately means providing documentation each time which can be very time consuming. Especially when they are spread out throughout the year.
  • Using one specialist lender for a whole portfolio means that we can often negotiate a lower rate. A few lenders are now looking to compete with high street rates, but with the speed of specialist. They are also generally happy with interest only at a higher loan to value too.
  • There is only one legal fee and arrangement fee. Completing the legal work in bulk is less costly, you will only need one appointment for legal advise and to sign the documents. This means you’ve only got to do it once in 5 years if you want to!
  • Building a track record with a lender is great when you want to buy more properties. When they can see your conduct it does make further lending easier and there is less required from you.
  • If you have some low value properties (under £75,000 generally) or low yielding properties that you can’t maximise the refinance on their own, putting them into a portfolio can help. They can rely on other higher value or yielding properties and lenders will often allow you to add on security which wouldn’t be suitable if it was on its own.

We can often use a desktop valuation rather than a visit from a surveyor. This is great at the moment; it means you don’t need to worry about booking appointments with tenants, but more importantly you don’t have the added worry of a person’s opinion as we are using only factual comparables. In this market I think that this is a huge advantage.

At a time where there are opportunities out there for cash buyers, a refinance to raise capital may seen appealing too. Perhaps an area you hadn’t thought about… ?

We are happy to take a look at your portfolio and see what the options are for you.

 

 

How Covid has changed the property market

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We are half way through lockdown, hopefully! How are you all finding it – is  it tougher than previously? This week I am talking about how Covid has changed the investment property market. I spoke about this at last week’s PIN meeting, but I wanted to go into a lot more detail on the blog as I think it’s such an important topic at the moment.

There are two aspects to this; the types of investors who are now coming to the market, as well as the types of property and tenancy.

Who could be the new investors on the block? 

There are plenty of reasons why people may be looking to get into property at the moment. We have had such a massive change of lifestyle and direction this year; many people have spent more time with their family and have realised that they want a career that is more flexible around that. We have all had time to stop and reassess what is really important to us – stepping off the hamster wheel can make you reluctant to get back on it!

Property can offer so much more flexibility in your life, it can be YOUR career on YOUR terms. It will be full of challenges, but also comes with autonomy…  and, of course, the potential for growth.

Grabbing an opportunity…

With plenty of working people having been furloughed for possibly a lot of months, then being made redundant, this may give some the push to use the money and put down a deposit on a property.

A lot of you will also have gained some extra time with less social activities, therefore allowing time to spend dedicated to researching potential areas to invest in and work on strategies.  Netflix or new career research…..????

Also, I think that having gone through this year and the uncertainty it has brought, it has increased the importance of having a diversified income stream. Property can be something to add to your income pot, adding an asset to any savings and/or pension, but importantly it gives an income to take the pressure off in a changing jobs market.

There are also a number of ways in which Covid has changed the way we view particular tenant profiles.

Students

This is a far more resilient market than I think anyone was expecting! Back in March lenders were worried that this academic year would be completely online learning from home; yet we have seen students return or go to university. They are craving any kind of normality it seems! There are also benefits to house sharing in HMOs over student accommodation at this time. It’s generally smaller bubbles and you have got more communal space if you are limited with your external social life. There’s also the option to encourage a two year letting period taking away the need to find and view somewhere new to live. This gives you the option of somewhere to stay during the summer if you’re not able to go home.

Long leases 

In this uncertain market, lenders and landlord are crying out for some guarantees, and that’s what this can offer. For a long time any lease over 12 months was a big problem, but now we have at least three lenders who are looking at this, and at competitive rates, on a 75% loan to value, interest only product as we discussed previously. The yield may work out slightly lower, but when you take out voids and repairs you aren’t far off what you would get for a professional tenant. This is definitely a growing market and something I’m sure we will see more of.

Holiday let’s

UK holidays are going to be the way forward for the next few years. I’m sure many of us (myself included!) enjoyed a fantastic UK holiday this year, and it’s made us all realise how many places there are for us to explore in the future. It’s a cheaper option, and for many that will be a big consideration next year. It’s also far more flexible with bookings and pets – abs is far more environmentally friendly!

As an investor, your self contained unit is going to be far more attractive than a hotel or B&B in these covid times. Lenders are becoming more open to these options too. We have a lender who will now allow you to purchase on a bridge to carry out some works and then move to a term mortgage in 9 months so you don’t need to worry about initial rental voids. This gives you some time to get it all ready to hopefully open once the weather improves and restrictions are over (big fingers crossed on that one!).  Also, there is a market for working away from home – which gives potential for the times of the year not traditionally busy.

We are again seeing lenders more open to holiday let’s, using both the market rent as a 12 month tenancy or the passing holiday let income if we have a proven track record.

Cities vs Suburbs

Priorities are changing for tenants. It’s no longer so important to have access to cities and towns and tenants are now favouring larger spaces both inside and out. Outdoor space has become far more desirable, and a home office or space to work is now a massive selling point. Other, more rural locations are becoming more attractive, which may open up new opportunities as investors – perhaps your local area, or something which is affordable that wouldn’t have worked previously for an investment property.

With change comes opportunity, and as a resilient group of investors I really feel that over the next few years we will see so much of both.

As always, call if you have any questions. Look after yourselves, only two more weekends to go – fingers crossed!

Can you avoid bridging finance?

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So we’re a quarter of the way through lockdown 2.0, let’s hope that with some good news on the vaccine we can start to see some normality by Christmas.

Even with great progress being made on this, we are still likely to see a few more months of uncertainty around a number of variables; builders, planning, conveyancing, and whether we really will see a drop in property prices.

For these reasons, we are seeing a reluctance from some clients to use bridging finance. I do understand, bridging is expensive and when you have less certainty around your exit plans and timescales, it’s difficult to work the costs into your project. The difficulty has been that we never really had much of an alternative where the property isn’t in a lettable condition, or where the rent is low in its current condition.

The Solution?

One of our lenders has this week launches a new ‘refurb in term’ product to deal with exactly these issues. The highlights of it are:

  • It allows you to complete on a property where you need to carry out a light refurbishment in order to let it out
  • The valuer will see the schedule of works and can take this into account when looking at the value as well as the market rent figures. This is especially important when you need a higher rental figure to make the deal work.
  • This can work for residential as well as semi commercial properties where they are tired and in need of a refurbishment before you can let it out
  • You can use it for existing HMOs where there is a license in place but it needs some refurbishment to attract more rent or different tenants
  • We can use a desktop valuation in the majority of cases, enabling a quick completion where required
  • The lender are offering a 2 year fixed with a 2 year tie in, allowing an opportunity to reassess what you are looking to do at that point. They also have a 5 year fixed with a 2 year tie in, offering you some more flexibility

There are some things to be aware of, as always:

  • The property does need to be habitable in its current condition
  • No heavy refurbishment or planning
  • You will need to show you’ve got 3 months mortgage payments in the bank to cover the refurbishment period
  • They are lending based on its current condition and value, so there’s no room for uplift at this point.

This could be a good option if you are looking for a long term project requiring planning for example, if you are happy to wait two years to start bigger works. It also works well if you are looking at a smaller refurbishment where you don’t think you’ll get enough of an uplift to warrant paying for a bridge. Hopefully you can look to refinance when market conditions are more favourable!

This isn’t an alternative to bridging in all circumstances, but it does offer a solution for certain areas, which we are seeing to be an issue due to the uncertainty.

As always, give me a call if you want to chat though a specific case. Have a good weekend!

Thinking outside the box: Options for your HMO

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Happy Friday all, welcome back to lockdown! This time things do feel different; the housing minister has been clear that it is ‘business as usual’ and we will be doing all we can to keep it that way.  We have been working from home since March so nothing changes for us! 

This week I want to talk to you about some options for your HMOs. There has been talk in the industry that the boom of HMOs is over, of which I disagree! In the HMO market we are seeing the need for diversification, though.

During these times we are seeing that tenants are becoming less likely to want to share facilities if they can afford the a choice. HMOs for professionals are perhaps less popular as people are working from home more, aren’t travelling for work and don’t need to be in a specific place. So what else could you use your HMO for? 

Longer leases for the whole property 

This is an area that has traditionally been tricky to obtain lending, but as banks crave certainty as much as landlords in such an uncertain market, things are changing. It has been a contentious issue for some time, but we are now seeing a change in lender appetite, allowing longer leases as well as vulnerable tenants in the property.

There are certain caveats to the lease, but we are able to have the draft lease checked by the lender’s legel team prior to submitting the application.  This allows you to have a level of certainty from the beginning. 

The product is available on a standard HMO interest rate, so you aren’t paying a premium, and you don’t need any specific experience as long as you have had an HMO for more than 12 months.  This really has opened up a new option! We have completed cases using this scenario and it is a straightforward process.  I would suggest engaging with your provider early on.  You need to understand what they need from a property in terms of facilities and location to ensure that you don’t spend money before you know it’s a viable option.

The student sector

Six months ago as we entered the first lockdown we were worried about what was going to happen to student let’s and some lenders even stopped allowing them entirely. What we have seen since September, however, is very different.

We are seeing students who are craving some sort of normality moving into their new homes as planned. We are also seeing students preferring a shared home rather than student accommodation, and wanting to commit for two years rather than one to create some stability.  

Lenders are back in the market after this shift, and so it may be worth thinking about this as an option for next year if your location allows.  As always, diversification is key, and we are seeing this through a variety of methods; different types of property, alternative locations and thinking outside the box for lease or tenant options. 

As always, we’re here to let you know how this could work for you so give us a call to discuss it further.

Stay safe, and try and enjoy your first lockdown weekend!